Bitcoin sinks below $78K after Warsh's Fed speech

Federal Reserve Chair Kevin Warsh gave his first big speech at the Fed's annual Jackson Hole gathering on Friday. He said inflation is still too high and the Fed has more work to do. Traders read that as a sign rates could stay higher for longer. Bitcoin, which had rallied hard all week, dropped as low as $77,955 within hours.

Bitcoin is often pitched as money that doesn't answer to any government or central bank. In practice, it still trades like a risk asset tied to Fed policy. Higher rates make safer investments like bonds more attractive. That pulls money out of riskier bets like crypto, and that's exactly what happened here. About $488 million in crypto positions were wiped out as the price fell, according to CryptoBriefing. Warsh never mentioned Bitcoin. He didn't need to. His tone on inflation was enough to move it.

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Was this a blip, or the start of a real pullback? Bitcoin had just posted its best week in months before Friday's drop. Some of this may just be profit-taking after a fast run-up. The real test comes at the Fed's next meeting. If Warsh follows through with an actual rate hike, crypto traders expect more pain.